BILL ANALYSIS
SB 1192
Page 1
Date of Hearing: August 25, 2010
ASSEMBLY COMMITTEE ON JUDICIARY
Mike Feuer, Chair
SB 1192 (Oropeza) - As Amended: August 20, 2010
As Proposed to be Amended
SENATE VOTE : 32-1
SUBJECT : AIRPORTS: RENTAL CAR FACILITY FEES
KEY ISSUE : SHOULD AIRPORTS RECEIVE NEW AUTHORITY TO REQUIRE THE
COLLECTION OF HIGHER RENTAL CAR FEES FROM CONSUMERS FOR THE
PURPOSE OF BUILDING CONSOLIDATED CAR RENTAL FACILITIES, WITH
APPROPRIATE NEW SAFEGUARDS, WHEN THE EXISTING FEE AUTHORITY IS
SHOWN TO BE INADEQUATE TO MEET REVENUE NEEDS?
SYNOPSIS
This bill previously passed the Committee on a 9-1 vote. It is
back before the committee after further amendment, which
extended the policy in the bill to all airports wishing to
exercise the authority that was previously restricted to four
designated airports. As proposed to be amended, the bill also
contains a clarifying definition. There is no known opposition.
The purpose of the bill is to allow airports to impose a
customer facility charge (CFC) on a rental car customer in a
scheduled amount per day, phased in over time, rather than at
the flat rate of $10 per contract allowed under existing law.
The CFC is currently authorized to provide for the finance,
design, and construction of consolidated airport car rental
facilities and the finance, design, construction and operation
of common-use transportation systems that move passengers
between airport terminals and the car rental facility. In
addition to allowing a higher fee, this bill expands the
purposes to which a CFC can be used, to include terminal
modifications to accommodate and provide customer access to
common-use transportation systems, as well as to acquire
vehicles for a common-use transportation system. Supporters
argue that the existing contract rate is insufficient to
generate sufficient revenue to allow for these purposes. In
order to ensure that this new authority is used prudently, the
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bill provides for new transparency and oversight.
SUMMARY : Provides for a new method of calculating and
controlling consumer fees for covered airport consolidated
rental car facilities, and new uses for those fees.
Specifically, this bill :
1)Provides an alternative method for calculating a customer
facility charge (CFC) based on the number of days a vehicle is
rented, up to a maximum of five days, rather than a flat rate
per contract, if an airport subject to the bill demonstrates
the need to do so.
2)Requires that any airport wishing to exercise this authority
must do so before January 1, 2018.
3)Expands the purposes to which a CFC can be used to include a
fee to finance, design, and construct terminal modifications
to accommodate and provide customer access to common-use
transportation systems, as well as to acquire vehicles for a
common-use transportation system.
4)Requires additional auditing and reports to demonstrate the
need for and purposes to which CFCs are put, including new
oversight by the State Controller.
FISCAL EFFECT : According to the Assembly Appropriations
Committee analysis:
1)Costs to the State Controller will be about $45,000 for each
audit and will be fully reimbursed by any airport that seeks
to assess the alternative CFC.
2)The state, which incurs around 220,000 car rental days per
year, could experience unknown increased costs for multi-day
rentals at the specified airports. (These increased costs
could be partially offset by reduced costs for single-day
rentals at these airports.) Regardless, any increased costs
would be allocated among a multitude of fund sources, thus the
impact on any single fund would likely be minor.
COMMENTS : In recent years, many airports have located rental
car facilities off-site, often in consolidated facilities that
house all car rental companies in one location. These
facilities may be served by common-use transportation systems,
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including bus shuttle systems, which transport rental car
customers to and from terminals and the consolidated rental car
facility.
These facilities and systems are made possible by rental car
user fees for customers who choose to rent from an on-airport
rental car company. The authority to collect these fees began
in 1999 when the Legislature passed and the Governor signed SB
1228, which permitted San Jose International Airport to collect
a customer facility charge of $10.15 to finance and construct a
consolidated rental car facility and common-use transportation
systems, subject to certain conditions. San Francisco and San
Diego were also permitted similar statutory authority.
In 2001, AB 491 (Frommer), Chapter 661, Statutes of 2001,
authorized other public airports to collect a $10 fee per
contract to finance, design, and construct consolidated rental
car facilities and common-use transportation systems. In 2007,
SB 641 (Corbett), Chapter 44, Statutes of 2007, repealed the
special authorization for San Jose International Airport and
instead applied the more general provisions enacted by AB 491 to
San Jose International Airport, thus permitting it to collect a
$10 per-contract CFC.
According to the author, consolidated rental-car outlets at
California commercial airports are now a fairly common practice.
These centralized rental locations aggregate the operations of
the on-airport rental car companies into one large site and
house rental offices such as service centers and ready/return
parking lots. Consolidated rental-car outlets are a vital step
toward alleviating airport traffic congestion and air pollution.
Consumer choice at many airports is also limited or
non-existent by the many separate rental-car outlets and use of
dedicated shuttles, vans and buses.
This bill would permit any covered airport operator to collect a
CFC calculated on an alternative basis - a varying amount per
day during each day of the rental period, rather than the
current $10 rate per-contract. This new authority would be
capped at a maximum of five days per rental. This is a new
method for calculating the CFC for airports that wish to invoke
it, but this alternative computation does not affect the
existing limitations and protections regarding CFCs. As with
the existing method of computation, CFC collection authority
terminates when the bonds used for financing are paid, except as
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otherwise specified.
According to the sponsor the amount of CFC charged in other
large hub U.S. airports for consolidated rental car facilities
ranges from $2.50 per day (Orlando, FL) to $6.20 per day (New
Orleans, LA). Of the 12 non-California airports surveyed, the
majority (five airports) were in the $2.50 to $4 range. Two
airports charged fees in the $4.01 to $5 range; four airports in
the $5 to $6 range; and one airport was above $6.
This bill would allow the CFC to be increased at the covered
airports over a period of time, starting at $6 and potentially
increasing to $9 if circumstances warrant. The City of Los
Angeles states that average car rental terms at LAX are a little
over four days. Under this bill, the CFC charge could go from
$10 to approximately $36. Supporters, including the California
Chamber of Commerce, believe increased fees are appropriate.
This bill would permit the alternatively-calculated customer
facility charge to be collected after a review and approval
process, beginning with a public hearing at the airport and
subject to a further review by the State Controller to
substantiate the need for and amount of the fee request.
According to a survey by the sponsor, six airports are currently
collecting a CFC, but none of the six has completed the audit
required by existing law, apparently without consequence. They
would be required to comply with this existing requirement as a
condition of exercising any new authority. The new review and
approval process is designed to ensure that there is better
oversight and accountability.
The bill also expands the uses of CFC revenue to allow for the
acquisition of vehicles to be used for the transportation of
customers in a common-use transportation system, and to allow
for terminal modifications for the purpose of accommodating and
providing access to a common-use transportation system. The
bill also clarifies existing law by using consistent terminology
and authorizing the use of CFC funds for the operation of
common-use transportation systems, but not for the operation of
consolidated airport rental facilities.
Existing law distinguishes between consumers at on-airport
rental car facilities and those who use off-airport facilities
in order to avoid imposing a user-fee on off-airport consumers
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unless they are required to use the common-use transportation
system. The fee must be proportionate to the costs of the
common-use transportation system only. This bill further
clarifies that any fee for a consolidated rental car facility
shall be collected only from customers of on-airport rental car
companies.
Author's Clarifying Amendment . To clarify one potential
ambiguity in the measure, the author appropriately proposes the
following amendment.
(i)" On-airport rental company" means a rental company operating
under an airport property lease or an airport concession or
license agreement whose customers use or will use the
consolidated rental car facility and the collection of the fee
as to those customers is consistent with subdivision (m)(1(C).
REGISTERED SUPPORT / OPPOSITION :
Support
City of Los Angeles (sponsor)
Alliance for a Regional Solution to Airport Congestion
Bob Hope Airport; California Airports Council
California Airports Council
California Chamber of Commerce
Fresno Yosemite International Airport
Inglewood-Airport Area Chamber of Commerce
San Francisco International Airport
Opposition
None on file
Analysis Prepared by : Kevin G. Baker / JUD. / (916) 319-2334